Positive Signs Needed from Euro, Transports
Four of the five major equity averages are trending up, but, at this stage, the negative divergence in the Dow Transports and lack of a breakout for the euro vs. the dollar could stomp out gains elsewhere.
To shift to positive, the weekly chart for the euro vs. the dollar needs a weekly close above its five-week modified moving average at 1.2441. This would continue the upward momentum in the other markets. The Dow Transports will shift to negative on its weekly chart with a close today below its five-week modified moving average at 5119.
Here's my analysis of the major markets:
Yield on the 10-Year Treasury Note. (1.693) -- The yield on the US Treasury 10-Year note set an all time low at 1.377% on July 25, and the high yield this week was 1.731%. The "flight to quality" bid faded significantly this week and today's close has a high probability of surpassing its five-week modified moving average at 1.588%, indicating that this yield should rise towards my semiannual and quarterly value levels at 1.853% and 1.869%, respectively.
I do not view this as a popping of a bond bubble, as the Federal Reserve has pledged to keep the federal funds rate at zero to 0.25% at least through late 2014. When this yield tested my semiannual risky level at 1.389% on July 25, I recommended that investors long the 10-Year Treasury note book profits. My monthly risky level for August is 1.468%.
Comex Gold ($1617.8) -- Comex gold stabilized around my annual pivot at $1575.8 the Troy ounce in July and has been above that key level since July 25.
A close today above the five-week modified moving average at $1602.0 keeps the weekly chart positive, and indicates upside to my semiannual risky levels at $1643.3 and $1702.5. A weekly close below my annual pivot at $1575.8 indicates risk to my new monthly value level at $1525.3 the Troy ounce.
Nymex Crude Oil ($93.68) -- Nymex crude oil bottomed at $77.28 a barrel on June 28 and has been rising, and this week's high reached $94.72. The weekly chart for crude oil remains positive with a close today above the five-week modified moving average at $89.03. My monthly value level is $90.40 a barrel with upside potential to my annual risky level at $103.58.